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Core Inflation Remains Low

Saturday, January 15, 2011 - 7:11 AM
December's CPI data was published by the BLS on Friday, and it showed high inflation, but this was driven primarily by gas prices. With energy and food prices excluded, the Core CPI only increased 0.1% in December and 0.8% for the year. According to the BLS, this was "the smallest December-December increase in the history of the index." Thus, don't expect the Fed to change course on this news.

The CPI used for computing the I-Bond inflation component (CPI-U non-seasonally adjusted) increased 0.2% in December and 1.5% over the last 12 months. The I-Bond inflation rate that will be used starting this May will be based on the CPI-U difference between March and September.

Sources:
Bureau of Labor Statistics CPI Summary
Savings Bond Advisor Inflation Update of Jan 2011
Forbes: CPI Shows Input-Cost Inflation Tempered By Overcapacity
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Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
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